Thrifty's price cuts lower earnings $14M in 3rd qtr

Drug Store News, Dec 9, 1991

Thrifty's price cuts lower earnings $14M in 3rd qtr.

LOS ANGELES - Thrifty Drug's price cutting, which is part of a broad and extensive reform in merchandising and management, is one apparent cause of an earnings slide at the drug stores in the third quarter.

Thrifty Drug parent Pacific Enterprises reported that "lower margins" at Thrifty Drug were the main cause of a $14 million loss at its Thrifty Corp. retail division in the quarter ended Sept. 30.

Operating income after taxes in the third quarter of last year was a net of $5 million at the division, which includes Pay 'n Save drug stores, Bi-Mart discount stores and three sporting goods chains.

"[Thrifty Drug] is implementing new merchandising and marketing strategies which have not yet generated sufficient sales to overcome the increased costs of the new strategies," said James Ukropina, PE chairman and ceo.

For the nine months, an operating loss after taxes was $10 million, compared with a net gain of $34 million in the comparable year-earlier period. PE doesn't break out results for Thrifty Drug.

Sales for Thrifty Corp.'s six retail units were $813 million for the quarter, a 6 percent increase from the year before; same-store sales increased 4.1 percent compared with a 1.3 percent gain in last year's third quarter.

During the quarter, Thrifty converted to a new "performer" format for most of a group of 40 stores which will be remodeled for Christmas.